India's GDP Growth Forecast: What to Expect Amid Energy Challenges and Monsoon Woes

S&P Global Ratings has projected India's GDP growth to slow to 6.6% for the current fiscal year, citing energy stress, a sub-par monsoon, and global economic slowdown as key factors. The report highlights the impact of El Niño on rainfall and the government's contingency plans for agriculture. With rising crude oil prices and inflation affecting purchasing power, the economic landscape appears challenging. This article delves into the details of the forecast and its implications for the Indian economy.

By Narendra Chaudhary Jun 24, 2026, 15:35 IST

Economic Growth Projections for India

New Delhi: According to S&P Global Ratings, India's GDP growth is expected to decline to 6.6% for the current fiscal year due to energy pressures, an underwhelming monsoon, and a slowdown in global economic activity.

The economy had previously achieved a growth rate of 7.7% in the fiscal year 2025-26 and 7.1% in 2024-25.

In their latest report, S&P indicated that real GDP growth is projected to decrease to 6.6% for the fiscal year ending March 2027, down from 7.7% in fiscal 2026, primarily due to energy challenges, anticipated poor monsoon conditions, and a deceleration in global growth.

This forecast aligns with the Reserve Bank of India's estimate of 6.6%.

The El Niño phenomenon has adversely affected monsoon rainfall, leading to a significant deficit of 43% as of June 22.

In response to the inadequate monsoon, the government has developed contingency plans for each state, suggesting alternative crops that are better suited for low rainfall scenarios.

India relies on imports for 88% of its crude oil, and rising global prices are expected to inflate the import bill and contribute to inflationary pressures.

In their report titled 'Economic Outlook Asia-Pacific Q3 2026: AI-Exposed Markets To Outperform', S&P noted that the region's economic outlook is influenced by robust global activity, energy market challenges, and a surge in tech exports driven by AI.

The energy stress stemming from conflicts in West Asia is impacting industries, leading to increased input costs and longer delivery times from suppliers. Additionally, rising fertilizer prices are affecting food production and contributing to higher food prices.

Inflation is diminishing purchasing power, which in turn is hindering economic growth. S&P highlighted that sharply rising fertilizer costs could further impact food production and elevate food prices.

Consumer inflation in India is projected to be 0.5-0.6 percentage points higher in the third quarter, with an expected rise to 5.1% for the current fiscal year as manufacturers pass on increased energy costs to consumers, alongside recent hikes in petrol, diesel, and cooking gas prices.

S&P anticipates a potential increase in policy rates during the latter half of this fiscal year.